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2018 (1) TMI 898 - HC - Income TaxRegistration under Section 12A denied - as contended by the Revenue that the assessee provides services for which it charges users on a commercial basis and therefore, cannot fall within the charitable object, for which it was established - Held that - We notice that both the appellate authorities have concluded that the assessee s objects are charitable; it provides basic services by way of domain name registration, for which, it charges subscription fee on annual basis and also collects connectivity charges. The assessee is the only nationally designated entity entitled to allocate domain names to its applicants who seek it in India. Apparently, it is also an affiliate national body of the ICAMM and authorized to assign .in registration and domain names in terms of Central Government s letter dated 20.11.2004. In that sense, the assessee (though not a statutory body) is carrying on regulatory work. It s case would therefore be a fortiori on a different footing than Chamber of Commerce, and other such trade bodies, set up not for profit basis but should have been held to be charitable organizations such as Bureau of Indian Standards, ICAI Accounting Research Foundation, etc. Bureau of Indian Standards v. Director General of Income Tax (Exemption) (2012 (11) TMI 891 - DELHI HIGH COURT); ICAI Accounting Research Foundation v. Director General of Income Tax (Exemption) 2009 (8) TMI 61 - HIGH COURT OF DELHI . No question of law arises
Issues:
1. Appeal against decision of Income Tax Appellate Tribunal (ITAT) under Section 260A of the Income Tax Act, 1961. 2. Taxability of receipts as commercial activity for A.Y. 2009-10. 3. Charitable status of the assessee Section 25 Companies Act entity providing general public utility services. 4. Nature of services provided by the assessee and its commercial basis. 5. Interpretation of the objects of the assessee in relation to charitable activities. Analysis: 1. The Revenue's appeal challenged the ITAT's decision for A.Y. 2009-10, where the CIT(A) had set aside the findings of the Assessing Officer (AO) regarding taxability of receipts amounting to `11,39,72,556/-. The AO argued that the subscription fees and charges by the assessee were commercial, not charitable. 2. The assessee, a Section 25 Companies Act entity, was granted registration under Section 12A and engaged in general public utility services. The AO contended that the fees charged were commercial, contrary to charitable objects. However, the CIT(A) and ITAT found the services provided by the assessee to be incidental to its main charitable objects. 3. The CIT(A) determined that the assessee lacked a profit motive and provided services of general public utility. The ITAT upheld these findings, emphasizing the charitable nature of the assessee's activities, including domain name registration services and connectivity charges. The assessee's unique role in allocating domain names in India was highlighted, indicating regulatory work akin to charitable organizations like Bureau of Indian Standards and ICAI Accounting Research Foundation. 4. The Revenue argued that the assessee's commercial services precluded it from being considered charitable. In contrast, the assessee maintained that the CIT(A) and ITAT decisions were justified. The Court noted that the assessee's regulatory role and public utility services distinguished it from profit-oriented entities, aligning it more with charitable organizations. 5. Considering the lower appellate authorities' conclusions on the charitable nature of the assessee's activities and its unique regulatory role, the Court found no legal question warranting intervention. Consequently, the appeal was dismissed, affirming the charitable status of the assessee and the non-taxability of the receipts in question.
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